MERGER AGREEMENT
This Merger Agreement (this "Agreement") is made and entered
into as of March 24, 1997, between Fairfield Manufacturing Company, Inc., a
Delaware corporation ("Fairfield") and First Colony Farms, Inc., a Delaware
corporation ("First Colony").
W I T N E S S E T H
WHEREAS, each of Fairfield and First Colony are direct,
wholly-owned subsidiaries of Lancer Industries Inc., a Delaware corporation
("Lancer");
WHEREAS, for (i) purposes of eliminating certain corporate
franchise tax and other expenses associated with maintaining First Colony's
corporate existence and simplifying Lancer's corporate structure and (ii) other
valid business purposes, First Colony and Fairfield wish to merge (the
"Merger"), with Fairfield being the surviving corporation of the Merger;
WHEREAS, as of the date hereof, First Colony has net assets
(the "Net Assets") consisting of approximately $9,816 in cash;
WHEREAS, based on the most recent valuation of the Fairfield
common stock prepared by Chartered Capital Advisors, Inc.(the "Fairfield Stock
Valuation"), the Fairfield common stock, par value $.01 per share (the
"Fairfield Common Stock"), has a value of $8.31 per share; and
WHEREAS, the Merger is intended to be a tax-free
reorganization pursuant to Section 368(a)(1)(A) of the Internal Revenue Code of
1986.
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements herein contained, Fairfield and First Colony agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective time (as defined in Section
1.3 of this Agreement), and subject to the terms and conditions of this
Agreement and the General Corporation Law of the State of Delaware (the "DGCL"),
First Colony shall be merged with and into Fairfield, the separate corporate
existence of First Colony shall thereupon cease and Fairfield shall be the
surviving corporation of the Merger (sometimes hereinafter referred to as the
"Surviving Corporation"). The name of the Surviving Corporation shall be
"Fairfield Manufacturing Company, Inc.".
1.2 Effects of the Merger. At the Effective Time, the
Surviving Corporation shall continue its corporate existence under the laws of
the State of Delaware. The Merger shall have the effects specified in Section
259 of the DGCL.
1.3 Effective Time. As soon as practicable following the date
hereof, the parties to this Agreement shall effect the Merger by filing with the
Delaware Secretary of State a certificate of merger in such form as is required
by, and executed in accordance with, the relevant provisions of the DGCL (the
time of such filing being herein referred to as the "Effective Time").
1.4 Certificate of Incorporation; By-Laws. The
Certificate of Incorporation and By-Laws of Fairfield as in effect immediately
prior to the Effective Time shall, as of the Effective Time, be the Certificate
of Incorporation and By-Laws of the Surviving Corporation.
1.5 Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any further action on the part of the holders thereof:
(a) (i) each share of Common Stock, par value $.01 per share,
of First Colony (the "First Colony Common Stock") issued and
outstanding immediately prior to the Effective Time shall be canceled
and shall cease to exist at and after the Effective Time, and (ii)
based on the Net Assets of First Colony and the Fairfield Stock
Valuation, Lancer shall receive 1,181 shares of
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the Fairfield Common Stock in exchange for its shares of First
Colony Common Stock;
(b) each share of the Fairfield Common Stock issued and
outstanding immediately prior to the Effective Time shall remain
outstanding and shall represent one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving
Corporation; and
(c) each share of the 11-1/4% Cumulative Exchangeable
Preferred Stock of Fairfield, par value $.01 per share and a
liquidation value of $1,000 per share, issued and outstanding
immediately prior to the Effective Time shall remain outstanding and
shall represent one fully paid and nonassessable share of 11-1/4%
Cumulative Exchangeable Preferred Stock, par value $.01 per share and a
liquidation value of $1,000 per share, of the Surviving Corporation.
ARTICLE II
MISCELLANEOUS
2.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of Fairfield and
First Colony, by mutual written consent of Fairfield and First Colony.
2.2 Amendment. This Agreement may not be amended except by
action of Fairfield and First Colony set forth in an instrument in writing
signed on behalf of each of Fairfield and First Colony.
2.3. Other Provisions. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the conflict of rules thereof.
This Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their
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respective successors ans assigns. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement. This Agreement, including any exhibits
hereto and the documents and instruments referred to herein, embodies the entire
agreement and understanding of the parties to this Agreement in respect of the
subject matter of this Agreement. There are no agreements, restrictions,
promises, representations, warranties, covenants or understandings other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
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IN WITNESS WHEREOF, the parties to this Agreement have set
their hands on the date first set forth above.
FAIRFIELD MANUFACTURING COMPANY,
INC.
By: /s/ XXXXXXX X. XXXX
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice-President-Finance
FIRST COLONY FARMS, INC.
By: /s/ XXXXX X. XXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
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